Despite a big miss for December non-farm payrolls, stocks managed to finish strong and end the week on an up note. The S&P MidCap SPDR (MDY) led the market with a .74% gain, while the Dow Diamonds (DIA) lagged with a .01% loss. The miss in non-farm payrolls put a strong bid in Treasuries and this pushed the 10-YR Treasury Yield ($TNX) sharply lower, which in turn helped interest-rate sensitive shares. The Utilities SPDR (XLU) and the Home Construction iShares (ITB) gained 1.43% on Friday, while the REIT iShares (IYR) advanced over 1%. We also saw big moves in the Gold Miners ETF (GDX) and the Silver Miners ETF (SIL) as gold extended its oversold bounce. It is going to be a big week for retail because the Commerce Department reports Retail Sales on Tuesday before the open. Housing stocks will also be in the spotlight with housing starts and building permits on Friday. The chart below shows the Energy SPDR (XLE) at an interesting juncture as it hits the 62% retracement with a falling wedge. XLE has been underperforming SPY, but did hit a new high in late December and remains in an uptrend overall. Look for a breakout at 87.25 to reverse this downswing.
**This chart analysis is for educational purposes only, and should not
be construed as a recommendation to buy, sell or sell-short said securities**
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Key Reports and Events (all times Eastern):
Tue - Jan 14 - 08:30 - Retail Sales
Wed - Jan 15 - 07:00 - MBA Mortgage Index
Wed - Jan 15 - 08:30 - PPI
Wed - Jan 15 - 10:30 - Crude Inventories
Wed - Jan 15 - 14:00 - Fed's Beige Book
Thu - Jan 16 - 08:30 - Initial Claims
Thu - Jan 16 - 08:30 - CPI
Thu - Jan 16 - 10:00 - NAHB Housing Market Index
Thu - Jan 16 - 10:30 - Natural Gas Inventories
Fri - Jan 17 - 08:30 - Housing Starts/Building Permits
Fri - Jan 17 - 09:15 - Industrial Production
Fri - Jan 17 - 09:55 - Michigan Sentiment
Fri - Jan 17 - 10:00 - JOLTS - Job Openings
Charts of Interest: Tuesday and Thursday
This commentary and charts-of-interest are designed to stimulate thinking. This analysis is
not a recommendation to buy, sell, hold or sell short any security (stock ETF or otherwise).
We all need to think for ourselves when it comes to trading our own accounts. First, it is
the only way to really learn. Second, we are the only ones responsible for our decisions.
Think of these charts as food for further analysis. Before making a trade, it is important
to have a plan. Plan the trade and trade the plan. Among other things, this includes setting
a trigger level, a target area and a stop-loss level. It is also important to plan for three
possible price movements: advance, decline or sideways. Have a plan for all three scenarios
BEFORE making the trade. Consider possible holding times. And finally, look at overall market
conditions and sector/industry performance.
